A pre-order is an order placed for an item that has not yet been released. The idea for pre-orders came because people found it hard to get popular items in stores because of their popularity. Companies then had the idea to allow customers to reserve their own personal copy before its release, which has been a huge success.
Pre-orders allow consumers to guarantee immediate shipment on release, manufacturers can gauge how much demand there will be and thus the size of initial production runs, and sellers can be assured of minimum sales. Additionally, high pre-order rates can be used to increase sales further.
Order incentive
Order incentive, also known as Order bonus, is a
marketing
Marketing is the process of exploring, creating, and delivering value to meet the needs of a target market in terms of goods and services; potentially including selection of a target audience; selection of certain attributes or themes to emph ...
tactic in which a
retailer
Retail is the sale of goods and services to consumers, in contrast to wholesaling, which is sale to business or institutional customers. A retailer purchases goods in large quantities from manufacturers, directly or through a wholesaler, and t ...
or
manufacturer
Manufacturing is the creation or production of goods with the help of equipment, labor, machines, tools, and chemical or biological processing or formulation. It is the essence of secondary sector of the economy. The term may refer to a ran ...
/
publisher
Publishing is the activity of making information, literature, music, software and other content available to the public for sale or for free. Traditionally, the term refers to the creation and distribution of printed works, such as books, newsp ...
of a product (usually a
book
A book is a medium for recording information in the form of writing or images, typically composed of many pages (made of papyrus, parchment, vellum, or paper) bound together and protected by a cover. The technical term for this physical arr ...
or
video game
Video games, also known as computer games, are electronic games that involves interaction with a user interface or input device such as a joystick, controller, keyboard, or motion sensing device to generate visual feedback. This fee ...
) encourages buyers to reserve a copy of the product at the store prior to its release.
Reasons vary, but typically, publishers wish to ensure strong initial sales for a product, and the offered incentive is used to induce shoppers who might otherwise wait for positive reviews or a specific shopping period, like the holiday season, to commit to a purchase. Having paid for part or all of the purchase when placing the order, the consumers will usually complete the transaction shortly after the product's release, often on its first day in stores. Individual stores or
retail chain
A chain store or retail chain is a retail outlet in which several locations share a brand, central management and standardized business practices. They have come to dominate the retail and dining markets and many service categories, in many pa ...
s may also offer bonuses for a popularly anticipated product to ensure that the customer chooses to buy at that location, rather than from a competitor.
The order bonus may be as simple as a
discount on the item's purchase price or other related merchandise, another marketing strategy, or it may be an actual item or set of items. The items may be related merchandise or exclusive items available only through the order program.
In video games
Until around 2000, the primary distribution method for video games were through physical media such as
CD-ROM
A CD-ROM (, compact disc read-only memory) is a type of read-only memory consisting of a pre-pressed optical compact disc that contains data. Computers can read—but not write or erase—CD-ROMs. Some CDs, called enhanced CDs, hold both comput ...
s,
DVD
The DVD (common abbreviation for Digital Video Disc or Digital Versatile Disc) is a digital optical disc data storage format. It was invented and developed in 1995 and first released on November 1, 1996, in Japan. The medium can store any kin ...
s, or
game cartridges
A ROM cartridge, usually referred to in context simply as a cartridge, cart, or card, is a replaceable part designed to be connected to a consumer electronics device such as a home computer, video game console or, to a lesser extent, electro ...
, including packaging and instruction manuals. Preparing enough copies for vendors to purchase and sell to consumers on the release day required a significant amount of market forecasting. Episodes in the industry's past, such as the
1983 video game crash
The video game crash of 1983 (known as the Atari shock in Japan) was a large-scale recession in the video game industry that occurred from 1983 to 1985, primarily in the United States. The crash was attributed to several factors, including ma ...
, had made publishers wary of producing in great excess to avoid the situation that led to the
Atari video game burial
The Atari video game burial was a mass burial of unsold video game cartridges, consoles, and computers in a New Mexico landfill site, undertaken by the American video game and home computer company Atari, Inc. in 1983. Before 2014, the goods b ...
. On the other hand, having too few copies available at the game's launch can lead to consumer dissatisfaction.
Retailers like
GameStop
GameStop Corp. is an American video game, consumer electronics, and gaming merchandise retailer. The company is headquartered in Grapevine, Texas (a suburb of Dallas), and is the largest video game retailer worldwide. , the company operates 4,5 ...
and
Amazon.com
Amazon.com, Inc. ( ) is an American multinational technology company focusing on e-commerce, cloud computing, online advertising, digital streaming, and artificial intelligence. It has been referred to as "one of the most influential economi ...
discovered in the early 2000s that the ordering mechanism helped with forecasts, as they could order a reasonable number of copies of new games based on order interest, which, in turn, helped publishers to determine how many physical units to create. Then, orders were usually placed by providing the vendor with a small percentage of the game's cost to hold their reservation (such as $5 or $10 on a $50 game), with assurances they would receive their copy on release day after paying the remaining balance. Retailers would be able to use order money towards other investments, effectively accruing some
interest
In finance and economics, interest is payment from a borrower or deposit-taking financial institution to a lender or depositor of an amount above repayment of the principal sum (that is, the amount borrowed), at a particular rate. It is distinct ...
on the order fee.
As the video game market grew with some widely popular series like ''
Call of Duty
''Call of Duty'' is a first-person shooter video game Media franchise, franchise published by Activision. Starting out in 2003, it first focused on games set in World War II. Over time, the series has seen games set in the midst of the Cold W ...
'' and ''
Grand Theft Auto
''Grand Theft Auto'' (''GTA'') is a series of action-adventure games created by David Jones (video game developer), David Jones and Mike Dailly (game designer), Mike Dailly. Later titles were developed under the oversight of brothers Dan Hous ...
'', publishers would prepare by printing large runs of the games and having them ready to ship to retailers so that even consumers who failed to order would likely be able to get a copy within a day or two of release, negating the primary drivers to order. Furthermore,
digital distribution eliminated the need for retail versions started to take off, as there is effectively no fixed volume of digital copies.
Then, publishers and retailers started to turn to other methods to encourage orders. Publishers created limited edition packages that would include additional physical items with the game, such as art books, soundtrack CDs, or figurines of the game's characters. Such editions would be published only in limited numbers encouraging consumers to order early to reserve one. Retailers made deals with publishers to allow for unique content for the game that could be obtained only by orders through that vendor.
Ordering is a part of most major releases but is now a significant point of contention. Some consumers believe ordering to be a waste and do not believe that any kind of incentive is truly worth a marked up price of sometimes over twice the original price for certain digital in-game order bonuses, which may be released as free
downloadable content
Downloadable content (DLC) is additional content created for an already released video game, distributed through the Internet by the game's publisher. It can either be added for no extra cost or it can be a form of video game monetization, enablin ...
sometime later after the game's original release.
Others have pointed out that with the ordering process, publishers can effectively assure a sale of the game to those consumers and so can release the game in an unfinished state or missing certain features to that
captive audience
Captive audience may refer to:
Law
* Captive audience meeting, a mandatory meeting used by employers to oppose unionization
* A legal concept in:
** '' Rowan v. United States Post Office Department'', 1970, in which the United States Supreme Co ...
, but without orders, critical reviews of a game released in such a state would have harmed their sales.
That itself then leads to issues of promotion and marketing of how to sell a game as to gain orders, which can lead to some potentially deceptive practices. In some cases, a game can be significantly delayed or even canceled, making the ordering process useless.
In most cases, an order can be refunded to the purchaser prior to release. However,
Nintendo
is a Japanese Multinational corporation, multinational video game company headquartered in Kyoto, Japan. It develops video games and video game consoles.
Nintendo was founded in 1889 as by craftsman Fusajiro Yamauchi and originally produce ...
has a policy for digital orders that does not allow such refunds. Consumer authorities in Germany and Norway took Nintendo to court in 2019, arguing this practice violated the
Consumer Rights Directive 2011 for the European Union. The court ruled in January 2020 that Nintendo's practice does not violate the directive, though the German consumer authority does plan to appeal the ruling.
See also
*
Crowdfunding
Crowdfunding is the practice of funding a project or venture by raising money from a large number of people, typically via the internet. Crowdfunding is a form of crowdsourcing and alternative finance. In 2015, over was raised worldwide by crow ...
References
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Sales